Harris Williams & Co.

Transmission & Distribution Infrastructure | Summer 2014

CONTENTS
Abstract

T&D Infrastructure Overview

T&D Market Outlook

Industry Growth Drivers

T&D Landscape

Select HW&Co. Transactions

CONTACTS

United States

Andrew Spitzer | Managing Director

aspitzer@harriswilliams.com
+1(804) 915-0174
Tiff Armstrong | Managing Director
Transmission & Distribution Infrastructure tarmstrong@harriswilliams.com
+1(804) 915-0176
A Harris Williams & Co. White Paper Brian Lucas | Managing Director
blucas@harriswilliams.com
Summer 2014 +1(804) 932-1323
Matthew White | Director
mwhite@harriswilliams.com
The North American Electric Transmission & Distribution (“T&D”) industry is +1(804) 915-0131
characterized by significant committed, announced, and anticipated investment in Luke Semple | Director
infrastructure, which is forecasted to exceed $49Bn in 2015. Fueled by the need to lsemple@harriswilliams.com
+1(804) 915-0158
improve the reliability and capacity of the North American T&D network and by
Chris Burnham | Vice President
long-term regulatory requirements and incentives providing an avenue for earnings cburnham@harriswilliams.com
growth, utilities and developers are making substantial investments to replace, +1(804) 915-0142

upgrade, and expand new and existing T&D infrastructure. This prolonged Ian Thomas | Vice President
ithomas@harriswilliams.com
investment cycle is in its early stages and will continue its robust growth. +1(804) 932-1384

Our mission with this paper is to provide an overview of the U.S. T&D industry with Europe
a particular focus on the trends driving growth in T&D infrastructure investment
Julien Darmon | Managing
spending. Director
jdarmon@harriswilliams.com
+44 20 7518 8900
Jeffery Perkins | Managing
Director
jperkins@harriswilliams.com
+49 69 7593 7166
Harris Williams & Co. Transmission & Distribution Infrastructure | Summer 2014

T&D Infrastructure: Overview

Transmission & Distribution (“T&D”) infrastructure is the backbone of the electric

power system as it facilitates the delivery of electricity from power plants to end
customers. Energy is produced at electrical generating (power) plants at a relatively
low voltage. To prepare this power for transport, its voltage level is increased by
transformers to reduce energy loss during transportation along transmission lines.
Transmission lines carry electricity between regions to substations, where the
voltage level is reduced (or “stepped down”) so that it can be distributed to end
users, including residential, commercial, and industrial customers. Prior to end-
user delivery, distribution transformers decrease the voltage in order to safely
distribute electricity to end users. Distribution lines then deliver electricity through
overhead or underground power lines, while metering systems measure and record
the locations and amounts of power transmitted.

Exhibit 1
T&D Infrastructure Overview

2
4
3

6
7

 Power plant. Electricity is generated at the power plant.
 High voltage transformer. Large transformers increase
voltage from thousands to hundreds of thousands of volts so
power can be sent over long distances.
 Transmission lines. High voltage transmission lines carry
electricity from the power plant to substations.
 Transmission substation. Connects two or more transmission
lines and contains high-voltage switches that allow lines to be
connected or isolated for maintenance.
 Distribution substation. Transformers that reduce
voltage to a lower level so power can be sent out on
distribution lines to the surrounding community.
 Distribution system. Includes main or primary lines
and lower voltage or secondary lines that deliver
electricity through overhead or underground wires to
end users.
 Service connection. Line that connects meter at
end-user location.

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Harris Williams & Co. Transmission & Distribution Infrastructure | Summer 2014

Market Outlook

The North American T&D network is an immense grid of interconnected

generation facilities, high voltage transmission lines, substations, and low voltage
distribution lines. This vast infrastructure consists of nearly 450,000 miles of high
voltage transmission cables and approximately six million miles of distribution
cable serving nearly 300 million customers.

North American utilities are making considerable investments to replace, upgrade,

and expand new and existing T&D infrastructure, primarily driven by the need to
improve the reliability and capacity of the North American T&D network and by
long-term regulatory requirements and incentives. This prolonged investment
cycle is in its very early stages and will continue its robust growth as a result of
several factors, including:

 Aging and inadequate T&D  Focus on renewable energy

infrastructure; production;
 Increasing demand for outsourced  Shift from Coal to Natural Gas
service providers; Generation; and
 Regulatory tailwinds;  Proliferation of North American oil
and gas production.
 Increasing demand for reliable
power delivery;

As a result of these industry trends, utilities and developers are expected to make
a significant level of investment to replace, upgrade, and expand T&D
infrastructure over the next two decades that is a nearly three-fold increase over the
previous two decades. In addition to the nearly $880Bn projected to be spent by
utilities in the U.S. over the next 20 years, Canadian utilities are expected to invest
nearly $100Bn over the same time period on T&D infrastructure. This trend has
already started, with T&D spending increasing over 55% from 2010 to 2013E.
Exhibit 2
T&D Spending Overview
U.S. T&D Historical and Projected Spending U.S. T&D Historical and Projected Spending
($ in billions) ($ in billions)
$879
$50
$47
$44
$42
$36
$582
$29 $28
$327

$243
$298
$84
2009 2010 2011 2012 2013E 2014P 2015P Cumulative 1989 - 2009 Cumulative 2010 - 2030P
Distribution Spending Transmission Projects <100mm Transmission Distribution
Transmission Projects >100mm Potential Transmission Projects

Source: Stifel Nicolaus, ASCE, EEI, and IIR.

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Harris Williams & Co. Transmission & Distribution Infrastructure | Summer 2014

Significant T&D investment across North America

Major U.S. and Canadian utilities are continuing to invest heavily in T&D
infrastructure and have recently announced substantial investment over the next
seven years. Large transmission and distribution projects typically require several
years to complete as contractors construct new infrastructure. Each new, large
infrastructure project creates significant demand for T&D equipment and services
not only for construction-related purposes, but also for annual, recurring
maintenance, repairs, and upgrades. As of Q4 2013, Industrial Info Resources
(“IIR”), a leading aggregator of T&D industry data, was tracking 360 U.S. and 33
Canadian announced T&D projects to be completed between 2013 and 2020,
representing approximately $71Bn in cumulative project value.

Exhibit 3
Regional Spending Outlook

Canada
$10.7Bn+

New England
$3.5Bn

West Coast Rockies Northeast

Great Lakes $1.7Bn
$5.4Bn $21.6Bn $5.7Bn
Midwest
$11.7Bn Mid Atlantic
$0.7Bn
T&D investment over the next
two decades is projected to be
Southwest Southeast nearly $880Bn and $100Bn in
$8.8 Bn $1.1Bn the United States and Canada,
respectively.

Exhibit 4
Top Ten Utilities by Announced U.S. Investment
(# of projects and $ in billions)
# of Projects $
National Grid 5 $10.0
American Electric Power 14 4.8
Duke Energy 6 3.9
Xcel Energy 39 2.2
Edison International 12 2.0
Ameren Corporation 9 1.7
PacifiCorp 4 1.7
Central Maine Power Company 3 1.5
Northeast Utilities 3 1.4
Public Services Enterprise Group 7 1.3
All Other U.S. Projects 258 30.0
All Canadian Projects 33 10.7

All Projects 393 $71.1

Source: IIR.

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Harris Williams & Co. Transmission & Distribution Infrastructure | Summer 2014

Industry Growth Drivers

Growth in the T&D market is being driven by a number of attractive dynamics,

demonstrating that the U.S. is in the very early stages of a prolonged T&D spending
cycle.

Exhibit 5
Key Industry Growth Drivers

Aging and  Aging equipment requires replacement and upgrade of existing infrastructure
Inadequate T&D  Unreliable T&D infrastructure poses threat to national security as critical systems have failed during
Infrastructure previous outages
 Approximately 70% of transformers are over 25 years old and 60% of distribution poles are 30 to 50
years old relative to useful lives of 20 years and 50 years years, respectively
 Estimated that 70% of transmission lines are 25 years old or older and approaching the end of their
useful life.

Increased Demand  The median age of utility workers has steadily increased while the total in-house utility workforce
for Outsourced has substantially decreased
Service Providers  Estimated that nearly 62% of electric utility workers have the potential to retire or leave for other
reasons over the next decade
 Approximately 75% of utility infrastructure repair, replacement, and installation is currently
outsourced and more than 90% of utilities use outsourced contractors in some capacity

Regulatory  Energy Policy Act of 2005: Establishment of mandatory electric grid reliability standards and
Tailwinds incentivized T&D investments
 American Reinvestment and Recovery Act of 2009: Dedicated $108Bn to energy spending and tax
credits focused on improving electric delivery and reliability
 Federal Energy Regulatory Commission (“FERC”) Order 1000: Establishes transmission planning and
cost allocation requirements for public utility transmission providers
 Rapid Response Team for Transmission (“RRTT”): Established to improve the overall quality and
timeliness of electric transmission infrastructure

Increasing  U.S. electricity demand is expected to increase 24% from 2012 – 2040P
Demand for  Large potential economic loss from power failures
Reliable Power  Customer intolerance for power outages, including blackouts and brownouts, is a powerful issue
Delivery for state public utility commissions

Focus on  Spending on renewable energy projects has grown at a 37% CAGR over the past six years
Renewable Energy  Renewable portfolio standards (“RPS”) require renewable sources to account for nearly 4x the
Assets current generation capacity
 29 states and the District of Columbia currently require renewable energy to account for up to 40%
of a utility’s energy generation portfolio within the next two to twelve years
 Remotely located sources of renewable power require greater T&D investment to connect to grid

Shift From Coal to  Due to heightened environmental regulations, it is estimated that over 37GW of U.S. coal-fired
Natural Gas generation capacity is expected to be shuttered by 2020
Generation  Nearly 44% of all announced and expected capacity additions from natural gas-fired generation
 Shift is resulting in significant investment to upgrade and improve transmission infrastructure and
ensure grid reliability

Proliferation of  Technological advancements have driven a substantial increase in North American

North American Oil unconventional oil and gas production
& Gas Production  Drilling and production activities require a tremendous amount of power on site, and many of the
most prolific resources are often in remote locations with little infrastructure in place

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Harris Williams & Co. Transmission & Distribution Infrastructure | Summer 2014

Aging and Inadequate Infrastructure

The dual trends of long-term underinvestment in T&D infrastructure and

increasing demand for the reliable delivery of electricity have increased pressure
on the electricity grid. The existing electric power delivery system relies on an aging
infrastructure and largely reflects technology developed in the 1950s that struggles
to meet today’s growing demand. In a recent survey, 147 investor-owned utilities
reported that between 35% and 48% of their T&D assets either currently need or
will soon need replacement.
Exhibit 6
Current Infrastructure Age Relative to Useful Life
Transmission Infrastructure Distribution Infrastructure
(as a % of total) (as a % of total)
At End At End
5% 4%

Within
Near End 55%
Of
25% Near End
Of
41%
Within
70%

Source: EEI.

In order to avoid power outages from component and equipment failures, analysts
believe there is significant investment required on both the transmission and
distribution fronts due to the aging grid. The U.S. Department of Energy (“DOE”)
estimates 70% of transformers are 25 years old or older and 60% of circuit breakers
are more than 30 years old compared to useful lives of 25 years and 20 years,
respectively. Additionally, of the 450,000 transmission miles in the U.S., it is
estimated that 70% are 25 years old or older and approaching the end of their useful
life. This critical situation is driven by a lack of investment in transmission
infrastructure, which declined 44% from 1980 to 1999, while electricity use
simultaneously increased by 58%.

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Harris Williams & Co. Transmission & Distribution Infrastructure | Summer 2014

Exhibit 7
Aging Installed Base of Power Transformers
Annual Installments of Large Power Transformers Transformer Failure Rate Curve

600

500

400

Failure Rate
300

200

Early Wear Out

Intrinsic Failures
100 Failures Failures

0
5 25-30
1948
1951
1954
1957
1960
1963
1966
1969
1972
1975
1978
1981
1984
1987
1990
1993
1996
1999
2002
2005

Time (Years)

Source: EEI and Equity Research.

The story on the distribution side of the grid is much the same. At nearly six million
distribution miles in the U.S., the local distribution infrastructure is more than 13
times larger than the high voltage transmission grid. It is estimated that over 60%
of distribution poles were installed in the mid-1940s to mid-1970s and are now
approaching or have surpassed their useful life of 50 years. As one of the
components of the distribution grid most susceptible to the elements, poles will
likely require significant investment to maintain system stability. As such, the
American Society of Civil Engineers (“ASCE”) estimates annual distribution
spending of nearly $20Bn over the next several years, largely driven by recurring
investment to maintain, replace, and improve the aged distribution infrastructure.

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Harris Williams & Co. Transmission & Distribution Infrastructure | Summer 2014

Consequences of Inaction

Without expanded T&D transmission investment, grid congestion is forecasted to

increase, resulting in supply shortages and power interruptions. Grid congestion
becomes an increasing concern due to the consistently decreasing capacity margin,
which is defined as the difference between committed capacity and peak demand
expressed as a percentage of capacity resources. As peak demand catches up to
available capacity, electricity providers require a more efficient transmission
system to deliver power to end users. As the exhibits below from the DOE’s
National Electric Transmission Study indicate, reliability and congestion in existing
transmission infrastructure is a significant problem and a driver of planned
transmission mile additions.
Exhibit 8
System Disturbances and Planned Transmission Mile Additions
Congestion Areas in the Eastern Connection Planned Transmission Miles by Driver
(as a % of total
Economics /
Congestion
15%

Integration
of New
Generation
(Renewable Reliability
/ Variable) 58%
27%

Source: DOE and North American Electric Reliability Corporation (“NERC”) 2012 Long Term Reliability Assessment.

Power outages due to blackouts, brownouts, grid inefficiencies, and weather events
have increased at a CAGR of approximately 7% from 1999 to 2012. These outages
are the result of an aging infrastructure that is unable to properly support electricity
demand and withstand the effects of weather-related events. The DOE estimates
the annual cost of all power outages (including weather and other causes) is
approximately $150Bn. The recent California Blackout in June 2013, the Southwest
Blackout in September 2011, the Northeast Blackout in August 2003, and the
California Energy Crisis in 2000 and 2001 are some of the most notable examples of
outages directly related to the outdated and inadequate T&D infrastructure.
Moreover, aging T&D infrastructure has made the grid more susceptible to weather
events, such as Winter Storm Nemo in February 2013 and Superstorm Sandy in
October 2012, reinforcing the need to update and improve
the U.S. electric grid.

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Harris Williams & Co. Transmission & Distribution Infrastructure | Summer 2014

Exhibit 9
Historical U.S. Power Outages
Number of Major U.S. Power Outages Notable Widespread U.S. Power Outages

181  Central California Blackout of 2013

The most recent blackout in California occurred in June
148
of 2013 due to limitations of existing electric T&D
infrastructure, leaving over 145,000 people without
123 power.
 Southwest Blackout of 2011
104
92 95 In September 2011, a system disturbance occurred in
85 90 the Pacific Southwest, leading to cascading outages
78
and leaving approximately 2.7 million customers
60
55 55 58 without power.
44  Northeast Blackout of 2003
35 32
29 29 The Northeast Blackout in 2003 heightened awareness
22 24 27 21
7 regarding the limitations of existing electric T&D
infrastructure. It resulted in a $6Bn economic loss and
temporarily crippled key national security safeguards.
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012

Source: DOE.
Increasing Demand for Outsourced Service Providers

In addition to the need to invest a substantial amount of capital into existing

infrastructure, utilities are also contending with an aging workforce. Since 2002, the
median age of utility workers has steadily increased while the total in-house utility
workforce has substantially decreased. Additionally, according to the Center for
Energy Workforce Development (“CEWD”), almost 62% of electric utility workers
have the potential to retire or leave for other reasons over the next decade. These
trends, coupled with acute shortages at positions such as utility lineman, will drive
continued outsourcing of maintenance and new construction services to specialized
third-party partners. Furthermore, industry analysts estimate that approximately
75% of utility infrastructure repair, replacement, and installation services are
currently outsourced and that more than 90% of utilities use outsourced contractors
in some capacity.
Exhibit 10
Utility Workforce Trends
Utility Employment and Median Age Trends Potential Retirements
(as a % of total) (as a % of total utility workers)
100% 47
46
98%
45 39% 38%
37%
96% 44 32%

94% 43
42 19%
17%
92% 15% 15%
41
90% 40
2002 2004 2006 2008 2010 2012 Lineworkers Technicians Plant Operators Engineers
Total Employees as a % of 2002 Total Median Age 2010 to 2015 2015 to 2020

Source: U.S. Bureau of Labor Statistics and CEWD.

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Harris Williams & Co. Transmission & Distribution Infrastructure | Summer 2014

Regulatory Tailwinds

The reliable transmission of electricity to U.S. commercial, industrial, and

residential end-users is a critical element of the nation’s economy and national
security. Recognizing the deteriorating condition of this critical power
infrastructure, the U.S. government has directed significant efforts towards the
modernization and improvement of the electric grid to help reduce the economic
losses associated with power outages as well as to ensure the continuity of the
nation’s security systems.

A White House report issued in August 2013 (“Economic Benefits of Increasing

Electric Grid Resilience to Weather Outages”) as well as the recent 10 year
anniversary of the Northeast Blackout of 2003, highlight the current focus across
top levels of the U.S. government and the T&D industry on improving the nation’s
aging infrastructure. Moreover, the Department of Homeland Security’s (“DHS”)
2013 annual National Risk Profile noted that the lack of maintenance and
investment in the nation’s aging infrastructure “…will continue to result in
occasional industrial disasters…” with the rate of these disasters increasing if
sufficient funding and resources are not allocated. The DHS report also outlined
that the unpredictable repercussions of infrastructure failure will adversely affect
other areas of the U.S., most notably the economy and “potentially cause the U.S.
to fall behind other countries and regions economically, particularly China and
Europe.”

Exhibit 11
T&D Regulatory Overview

Energy Policy Act of 2005  Outlined the establishment of mandatory electric grid reliability standards and incentivized
T&D investments
 Eased, and in some cases eliminated, state or local citing practices for new transmission lines
 Allowed ROE on transmission projects 100 to 150 basis points higher than on other
investments, spurring utility transmission spending

FERC Order 1000  Establishes transmission planning and cost allocation requirements for public utility
transmission providers
 Encourages transmission infrastructure development
 Requires transmission providers to develop regional plans and cost-allocation methods
 Could reduce permitting delays, expediting the development of T&D infrastructure

Rapid Response Team for  Established to improve the overall quality and timeliness of electric transmission infrastructure
Transmission  Focuses on increasing electric reliability, integrating new renewable energy into the grid,
and saving consumers money
 Promotes cooperation amongst governing agencies to streamline and improve the review
and permitting of transmission projects

The ASCE’s recently released 2013 Report Card for America’s Infrastructure gave the U.S. a D+ and stated that “America
relies on an aging electrical grid…” while its accompanying Failure to Act report noted “The needs to maintain and update
existing electric energy infrastructure…will impose significant requirements for new energy infrastructure investment.”

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Harris Williams & Co. Transmission & Distribution Infrastructure | Summer 2014

Increasing Demand for Reliable Power Delivery

Growth in demand for the reliable delivery of electric power is also driving
increased investment in T&D infrastructure. Demand for electricity has grown
consistently over the past three decades, increasing by 82% since 1980. The EIA
projects continued consistent growth in demand for electricity in each of the
commercial, residential, and industrial sectors. This increase in demand is a result
of economic growth, the further digitalization of the global economy, including
growing electronic data storage and transfer requirements, and other technological
developments like electric vehicles. Total electricity use is forecasted to increase
across all sectors by approximately 24% from 2012 to 2040P. This demand growth
will require significant investment in T&D infrastructure to improve the
performance of existing systems, reduce the risk of loss from a power failure, and
expand the overall grid.

Exhibit 12
U.S. Electricity Demand by Sector
(kwh in billions)
5,000
Residential Commercial Industrial
4,500

4,000

3,500

3,000

2,500

2,000

1,500

1,000

500

0
1980 1985 1990 1995 2000 2005 2010 2015P 2020P 2025P 2030P 2035P 2040P

Source: EIA.

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Harris Williams & Co. Transmission & Distribution Infrastructure | Summer 2014

Focus on Renewable Energy

Driven by state-level renewable portfolio standards (“RPS”) and new federal

policies, utilities are actively diversifying sources of power generation. Capital
spending on renewable energy projects grew at a 37% CAGR over the past six years,
and is projected by industry analysts to increase 20% in 2013E to $99Bn, with
continued growth expected for the foreseeable future. The remote locations of most
major renewable power generation projects will require new high voltage
transmission systems to deliver the energy to the grid. The National Renewable
Energy Laboratory projects investment in transmission infrastructure of up to $9Bn
per year to connect remote areas of power generation to the grid.

Under current mandates in 29 states and the District of Columbia, renewable

energy is required to account for up to 40% of electricity generation within the next
two to twelve years. More specifically, eight states have mandatory or voluntary
RPS requirements by 2015, which increases to 20 states in 2020 and 35 states in 2025.
Compliance with these standards will require states to generate 55GW of renewable
energy by 2015 and 140GW by 2025 compared to the 40GW existing or under
construction in the United States. These standards will require increased
infrastructure investment as the most cost effective of these renewable resources
are located far from load centers and the existing grid.

Exhibit 13
U.S. Renewable Energy Resources
U.S. Concentrating Solar Resource U.S. Average Annual Wind Speed at 80m

The remote location of U.S. renewable resources will require signficant investment in new transmission lines.
Source: NREL.

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Harris Williams & Co. Transmission & Distribution Infrastructure | Summer 2014

Shift from Coal to Natural Gas Generation

The shift from coal-fired generation to natural gas-fired generation will require
billions in investment to upgrade the transmission grid. Tightening environmental
regulations have effectively ended the development of coal-fired generation plants
in the U.S. while the abundance of natural gas in the U.S. has led to significant
expected additions to natural gas-fired generation. The emissions control costs
imposed by EPA regulations have made it uneconomical for coal-fired plants to
continue operating. Doyle Trading Consultants estimates that over 37GW of U.S.
coal-fired generation capacity is expected to be shuttered by 2020, with nearly
23GW in the next two years alone. Furthermore, the Mercury and Air Toxics
Standards (MATS) are set to commence at the end of 2015 and 130 of the country’s
smaller plants lacking emissions control systems are scheduled for closure.
Between 2014 and 2020, it is expected that nearly 200 plants will be retired,
accounting for approximately 11% of all domestic coal capacity.

On the other hand, an abundance of natural gas supply from shale production and
persistent low prices are driving the construction of new natural gas combined-
cycle units to act as base load generators. Nearly 44% of all planned (announced)
and unplanned (not yet announced but expected by the EIA) capacity additions will
ultimately be natural gas by 2040. As a result, a number of Independent System
Operators (ISOs) and Regional Transmission Operators (RTOs) have identified and
approved billions of investment in smaller and medium sized projects that support
the transition away from coal generation through transmission upgrades to ensure
grid reliability. For example, PJM has approved over $9 billion in upgrades and
improvements related to the shift from coal to gas generation since 2012, while The
Electric Reliability Council of Texas (“ERCOT”) has approved over $450 million in
similar upgrades. These upgrades will continue to drive investment in
transmission infrastructure as the shift becomes more pronounced over the next
several years.

Exhibit 14
U.S. Coal Plant Retirements and Natural Gas Capacity Additions
U.S. Coal Plant Retirements U.S. Natural Gas Capacity Additions
25 120 140
# of Units
100 120
20 Capacity (MW)
Capacity (GW)

100
80
Capacity (GW)

15
# of Units

80
60
10 60
40
40
5
20
20

0 0
2013 2014E 2015P 2016P 2017P 2018P 2019P 2020P 2013 2018 2023 2028 2033 2038
Planned Combined Unplanned Combined
Cycle Additions Cycle Additions

Source: EIA and Equity Research.

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Harris Williams & Co. Transmission & Distribution Infrastructure | Summer 2014

Proliferation of North American Oil and Gas Production

Growth in domestic oil and gas production is requiring significant incremental

T&D investment to deliver power to often remote production sites.

Due to the rapid development of shale resources, U.S. oil production rose in each
of the last four years after more than 20 years of decline. While oil from
unconventional resources represented approximately 15% of U.S. production in
2010, the EIA estimates that currently identified unconventional oil plays could add
output of nearly three million barrels per day, representing almost 40% of U.S.
crude production by 2020. Unconventional resources have also dramatically
changed the landscape for domestic natural gas production. Shale gas production,
which accounted for 2% of domestic natural gas production in 2000, represented
approximately 35% of gas production in 2012 and is expected to increase to more
than 50% by 2040, according to the EIA.

The growth in domestic oil and gas production from these unconventional
resources is largely driven from remote regions within the U.S., such as the Bakken
Shale in North Dakota, the Eagle Ford Shale in south Texas, and the Permian Basin
in west Texas. The number of wells drilled in these three formations increased by
220% from 2009 to 2013 and represented over 40% of the total new wells drilled in
2013. The dramatic increases in wells drilled will require significant T&D
investment to connect these regions to the electrical grid and accommodate the
increasing demand for power throughout the life of the well site. Development
activities, such as artificial lift, require a tremendous amount of electrical power to
successfully produce oil and natural gas. As a result, there is over $4Bn of
announced and planned investment in T&D infrastructure in Texas and North
Dakota through 2020, largely driven by the need for electrical infrastructure to
power oil and gas development in remote locations.
Exhibit 15
Estimated T&D Spend and Select Projects
T&D Spending Select Regional Projects
($ in millions)
Expected
Investment
Utility / Owner Location Year
($MM)
Cumulative Complete
Investment
Minnkota Power Center, ND 2013/2014 $312
$4,160
LCRA Transmission Eldorado, TX 2013/2014 345

Oncor Krum, TX 2014 250

2014+
$2,881 AEP Vernon, TX 2014 180

Xcel Energy Fargo, ND 2015 250

2013 / 2014 Sharyland Utilities McAllen, TX 2015 40

$1,280 Henderson,
Southern Cross 2016 1,000
TX
T&D Investment in North Dakota and Texas
AEP Laredo, TX 2016 300

Source: IIR. Includes T&D investment in North Dakota and Texas from 2013E – 2020P.

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Harris Williams & Co. Transmission & Distribution Infrastructure | Summer 2014

Exhibit 16
Industry Landscape
Equipment Services
Grid
Medium Overhead Undergroun Natural Gas
Company Transformers High Voltage Low Voltage Automation Metering
Voltage Electric d Electric T&D
and Control

ABB
Alstom
Eaton
Large Cap

GE
Schneider
Siemens
XD Electric (China)
Hyundai
Mitsubishi

Hubbell
Itron
Small and Mid-Cap

Landis + Gyr
Lev iton
Rockwell
S&C Electric
Schweitzer
Sensus
SPX

Dycom
Henkels & McCoy
MasTec
Michels
Services

MYR Group
Osmose
Pike
PLH Group
PowerTeam Serv ices
Quanta Serv ices

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Harris Williams & Co. Transmission & Distribution Infrastructure | Summer 2014

Harris Williams & Co. Select Transactions

Infrastructure and Utility Services

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Harris Williams & Co. Transmission & Distribution Infrastructure | Summer 2014

Harris Williams & Co. Select Transactions (continued)

Power Products and Technologies

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a portfolio company of
a portfolio company of a portfolio company of
has been acquired by
has been acquired by
has been acquired by has been acquired by
has been acquired by has been acquired by

a division of

a portfolio company of a subsidiary of a portfolio company of

a portfolio company of

has been acquired by

has been acquired by has been acquired by

has been acquired by has been acquired by

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Harris Williams & Co. Transmission & Distribution Infrastructure | Spring 2014

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